Last summer LeEco announced it intended to purchase the US-based TV maker Vizio for $2 billion. The deal fell in March through amid a myriad of problems surrounding LeEco including a major cash crunch. Allegedly the deal including a $100 million buyer termination fee and now Vizio has filed suit in a California court to collect payment.
Vizio claims that in liue of paying Vizio the fee, the Chinese company offered to set up a joint distribution deal, which would have included paying Vizio $40 million up front, $10 million after the new deal closed with the remaining $50 million turned into a capital contribution for the joint venture. Yet Vizio alleges that LeEco never intended to pay the entire $100m and purposed the deal in an effort to reduce its liability by 60%.
And Vizio sounds like its onto something. The deal sounds shady from the start.
The lawsuit alleges that LeEco’s CEO, SVP of Finance and a director of LeEco’s holding company mislead Vizio executives on the health of LeEco’s holding company — the entity actually trying to purchase Vizio. It goes on to say that these executives, in person, over the phone and through email, mischaracterized the company’s financial, saying that LeEco needed to complete this merger to “either obtain the instant financial stability, credibility and resources.”
The lawsuit goes on to state Vizio believes LeEco were going to “use [the] publicly announced intended merger with VIZIO to gain or try to obtain access to VIZIO’s large corporate customers and key decision makers thereat for their own purposes and by means of confidential customer information that had been developed … and provide LeEco with access to VIZIO’s confidential customer information, including contact information, account history, purchasing needs or requirements, contract terms, and the like.”
This comes days after a Shanghai court froze $180 million in assets belong to LeEco founder and former CEO, his wife and three LeEco affiliates. Yesterday Faraday Future, who lists LeEco as a major financial backer, announced it was not going to build a factory in the Nevada desert that would have cost $1 billion. News also broke earlier today that LeEco would not be paying some of its workers in China until August 10th.
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